Crime and the Labor Market
The same policies or technological changes that affect the labor market can also affect the extent of criminal activities. For instance, while an increase in unemployment benefits can raise unemployment duration it may also reduce crimes by unemployed. Or, a technological change in the home sector that affects participation in the market may also raise participation in criminal activities. To analyze these interactions we construct a search-theoretic model where labor market outcomes and crimes are determined jointly. The description of the labor market follows Pissarides' (2000) canonical model of unemployment extended to account for decisions to participate in the labor force. We introduce random arrivals of crime opportunities for all individuals irrespective of their labor market status. Furthermore, we allow for optimal employment contracts that internalize the effect of crime activities on job duration. We calibrate our model to US data focusing on females. We investigate whether the change in preferences for market activities that is necessary to account for female labor force participation can also account for the substantial increase in female crime over the last half century. We also look at the effects of unemployment insurance, workers' bargaining power, skill-biased technological progress and the availability of crime opportunities
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|Date of creation:||03 Dec 2006|
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